Sports Direct shareholders revolt over poor governance
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Version 0 of 1. Sports Direct’s beleaguered chairman, Keith Hellawell, has been given a bloody nose by investors as more than a third of independent shareholders refused to give him their backing. At a fiery annual general meeting at the company’s Shirebrook headquarters, Mr Hellawell and his board attempted to play down accusations of mis-management and revelations of staff being disciplined for excessive toilet breaks and missing work through ill health. One investor also claimed staff were so scared of calling in sick that a female employee had given birth in the factory toilets for fear of losing her job. Shareholders asked the company to end the controversial use of zero-hours contracts for the vast majority of their staff, and called on bosses to stop lengthy searches of employees when they leave the warehouse. Mike Ashley, the founder and deputy executive chairman, who was present but did not speak at the meeting, was rejected by 12 per cent of shareholders for his re-election to the board, while an unprecedented 30 per cent of shareholders, excluding Mr Ashley’s 55 per cent holding, refused to re-elect Mr Hellawell. On the same day the company’s own house broker also appeared to criticise the lack of transparency by the board, warning that “investors may react adversely to the lack of detail” in a pre-meeting trading report to the stock market. In the meeting, Colin Hampton, a Unite union community branch secretary, asked the board for a meeting to discuss the allegations made against the company. He explained: “I said all these issues regarding poor working conditions should be looked at by investors and the general public alike and they should sit down with the trade union to address these issues. “They [the board] said there were no problems as far as they were concerned and that a lot of the issues being raised were without value and were scare stories. They were quite relaxed with their policies but they did talk about the sick leave issue because the fear in the workplace that you could be sacked for being ill has been a major problem. I added that the company was in danger of making the brand toxic.” He added: “They are in denial if they think they don’t have problems, but the board certainly looked nervous.” The company refused a meeting with the union but said they would speak to individual members of staff who raised concerns. At the end of the meeting, Mr Ashley spoke to Mr Hampton to discuss the issue of staff being forced to queue to leave the factory and undergo searches for stolen products. Other investors also raised Mr Hellawell’s suitability as chairman, especially after a disastrous performance before the Scottish Affairs Select Committee this year, when he admitted to being kept in the dark over the controversial administration of Mr Ashley’s USC fashion brand and was accused by MPs of running a “backstreet outfit”. Before the meeting, the company gave a brief update to the stock market, reaffirming that current trading was in line with guidance. However, Tony Shiret, a retail analyst at BESI and Sports Direct’s in-house broker, warned that investors may be disappointed with the lack of detail. His remarks followed warnings from investor groups who said the company’s lack of transparency raised serious governance issues. Nonetheless, all resolutions at the meeting passed, though more than half the shareholders voted against the company’s remuneration package for executives, including Mr Ashley. |